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The Dictator’s Incentives and Trade-Offs

By Pierre Lemieux | Oct 5 2024
A story in the Wall Street Journal illustrates some of the dictator’s incentives and trade-offs. It shows that it is not easy to be a dictator, how his country cannot be innovative and rich, and how it is not fun to live there even for somebody happy to serve the regime (Ann M. Simmons, “Spy ...

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“Here, We Sell Local”: Collectivist or Tribal Protectionism

By Pierre Lemieux | Oct 1 2024

That nationalism is a kind of collectivism or modern-tribalism is illustrated by a current phenomenon: foreigners seem so disliked that, in some people’s views, “we” should neither import from, nor export to, “them.” On the import side, foreigners—foreign producers or their governments or the latter’s taxpayers—are disliked because they produce goods at such a low .. MORE

Featured Comment

"tax cuts to increase deficits" I disagree, tax cuts were enacted, federal revenue did increase, but, spending exploded higher and thus the deficit got larger.

Craig, October 8

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Politics and Economics

Is divided government a good thing?

By Scott Sumner | Oct 12, 2024 | 1

It depends.  But I will argue that the thing it depends on is probably different from the thing that most people believe is important. When I was young, I looked at this issue in partisan terms.  Divided government is good (I thought) if the party I oppose holds the presidency, and united government is good .. MORE

Cost-benefit Analysis

When Should the Government Intervene?

By Art Carden | Oct 12, 2024 | 0

When should the government intervene? In introductory economics classes, we introduce market failures. In intermediate economics classes, we discuss them in greater detail. In advanced and field courses, we get into the nuts and bolts of different ways pure exchange doesn’t get the job done and how, theoretically, a government could improve things. Theoretically. The .. MORE

Books: Reviews and Suggested Readings

Decoupling Desert and Responsibility

By Kevin Corcoran | Oct 11, 2024 | 10

One of the differences in how people analyze the world I’ve found most interesting has been called high decoupling vs low decoupling. What is decoupling? In this context, it means an ability to consider ideas in isolation, disconnecting them from other variables and influences. Low decouplers think of ideas as embedded in a social context, .. MORE

Economic Education

Introducing EconLog Price Theory: Cutsinger’s Solution

By Bryan Cutsinger | Oct 11, 2024 | 1

[Editor’s Note: Dear readers, you delighted us with all your responses to Professor Cutsinger’s inaugural EconLog Price Theory Problem. Thanks! We reprint that question below, followed by his suggested solution. Next week, we’ll post problem #2. Long live price theory!] Question: In his book, Basic Economics, Thomas Sowell (2015) writes, “the price which one producer is .. MORE

Adam Smith

Pin Factory, 40,000 BC

By Scott Sumner | Oct 10, 2024 | 7

Adam Smith famously commented on how specialization increased productivity in a pin factory, where different individuals specialized in each subtask involved in manufacturing even a simple object. I thought of that anecdote when reading Razib Khan’s account of the difference between Neanderthals and early modern humans in Europe: Though Neanderthals made effective tools, they were .. MORE

Labor Market

Baumol’s Cost Disease Comes to Britain

By John Phelan | Oct 10, 2024 | 11

Britain’s incoming Labour government got a nasty welcoming present in July when independent pay review bodies told ministers that millions of public sector workers should receive a 5.5% pay increase. The cost of this accounts for about half of the £20 billion “black hole” in the budget which Chancellor Rachel Reeves claims to have inherited.  .. MORE

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Bloggers David Henderson, Alberto Mingardi, Scott Sumner, Pierre Lemieux, Kevin Corcoran, and guests write on topical economics of interest to them, illuminating subjects from politics and finance, to recent films and cultural observations, to history and literature.

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History of Economic Thought

A Possible Correction on Milton Friedman’s “Isolation” 5

In a September 4 post titled “The Isolated Milton Friedman,” I quoted two paragraphs from Michael Hirsh, Capital Offense: How America’s Wise Men Turned America’s Future Over to Wall Street. I won’t quote the whole passage again. Here’s a passage that struck me as strange, given what a warm and welcoming person Milton was: For .. MORE

Books: Reviews and Suggested Readings

Bad Economics in Fiction, Star Trek edition 22

Sometimes, fiction can be used to effectively communicate ideas from economics. Other times, the economics you see in fiction make no sense. This post is another example of the latter, from a fictional series I generally like – Star Trek. (For the record, Deep Space Nine was objectively the best Star Trek series.) One of the .. MORE

Austrian Economics

Tolstoy, Kirzner, and Happiness as a Process 1

A recent Liberty Fund Virtual Reading Group explored the theme of joy in Leo Tolstoy’s novel Anna Karenina. For Tolstoy, happiness is not an end state that a person can reach. It is an ongoing discovery process filled with trial and error. This is similar to the way many economists view markets. One of F.A. .. MORE

Book Reviews and Suggested Readings

Nature by the Numbers

By Maria Pia Paganelli

A Book Review of Pricing the Priceless: A History of Environmental Economics, by H. Spencer Banzhaf.1 How do you price scarce and valuable resources that are not traded in a market? Before answering that question, one may need to ask: why do we want to price those resources? In Spencer Banzhaf’s account of the history .. MORE

F.A. Hayek: Between Classical Liberalism and Conservatism?

By Pierre Lemieux

A Book Review of Rules and Order, by Friedrich Hayek. Jeremy Shearmur, ed.1 Fifty years ago next year, F.A. Hayek, soon to be awarded a Nobel Prize in economics, published Rules and Order, the first volume of his trilogy Law, Legislation, and Liberty.2 Two thousand and twenty-two marks the publication of a new consolidated edition .. MORE

Universal Economics: Necessary Reading for the Well-Trained Economist

By Alexander William Salter

A Liberty Classics Book Review of Universal Economics, by Armen Alchian and William Allen.1 What do you do when economists stop believing in economics? The “dismal science” never merited its dreary epithet, but trends in economics education at the graduate and undergraduate levels could change that. Ph.D. courses are saturated with hyper-mathematical models that are .. MORE

When Cost-Benefit Analysis Fails

By Arnold Kling

Whether to have a child is what I call a wild problem—a fork in the road of life where knowing which path is the right one isn’t obvious, where the pleasure and pain from choosing one path over another are ultimately hidden from us, where the path we choose defines who we are and who .. MORE